How consumer credit and flexible credit differ

How consumer credit and flexible credit differ

The names of different credit products can sometimes amaze you when applying for a loan. Typically, unsecured loans are referred to as consumer loans or flexible loans, but some banks may also include a special loan, a loan, an overdraft, a one-time loan, a one-time loan or a credit line. In this article, we will look at the key differences and similarities between these credit products.

Consumer credit

Consumer credit

Consumer credit is usually used to make pre-planned purchases, such as home improvement or car purchase, but also for loan consolidation, vacation or leisure activities.

The consumer credit will be repaid in full to the borrower's account and will be repaid in accordance with a pre-agreed repayment plan until the consumer credit is repaid in full.

Consumer credit is also referred to as a punctual credit, a one-time loan, a one-time loan, or a loan.

Pros and Cons of Consumer Credit

Pros and Cons of Consumer Credit

  • A predetermined payback period and a monthly installment facilitate the planning of the economy
  • Once the loan has been repaid, the loan agreement will expire
  • There is no agile way to finance small purchases of a few hundred euros

Flexible credit

Flexible credit

Flexibility is usually used to make smaller purchases, and it works like a back-up fund where your credit card is.

When applying for a flexible credit, the applicant is granted a credit line within which to withdraw. There is no limit to the number of withdrawals, but typically each withdrawal event is subject to a charge, which makes it worth considering the need for repetitive withdrawals.

In most cases, the repayment period of a flexible loan is not predetermined, but the amount of the repayment is a percentage of the loan granted or used. The repayment is often subject to a euro-denominated minimum, which includes at least credit interest and other costs such as an account management fee or billing fee. If the repayment covers only ongoing credit costs, it is worth bearing in mind that the loan itself must sooner or later be repaid.

Flexible credit is also referred to as an overdraft or credit line.

Depending on the issuer of the loan, a flexible loan can have a regular annual or monthly payment, so it is best not to keep the contract unnecessarily if it is not used.

Pros and Cons of Flexibility

Pros and Cons of Flexibility

  • Suitable for smaller sudden purchases if you often need a loan quickly
  • The repayment plan may not be as clear as in consumer credit
  • The credit agreement may incur annual or monthly payments, whether or not the credit has been used

Please check these before entering into a Flexible Credit or Consumer Credit Agreement

  • The amount of any opening or handling fee
  • Borrowing rate
  • Other credit costs, such as an account management fee or a billing fee
  • What the installment includes if the repayment period is not specified

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